Britain’s biggest coffee shop chain, Costa Coffee, has suffered a fall in sales at its high street stores and warned consumer demand would remain “subdued”.

Costa’s owner, Whitbread, said like-for-like sales at its UK outlets had fallen 1.5% in the 13 weeks to 30 November. Costa Express machines, which are mainly in petrol stations and convenience stores, fared much better, with 6.7% underlying sales growth.

The Whitbread chief executive, Alison Brittain, said like some highstreet retailers Costa had been hit by a decline in consumers, partly caused by a “structural shift to online shopping”.

But she insisted this did not mean the end of the coffee shop boom. “I’m a great optimist … that people do like to socialise with each other. In the old days this would have been the pub environment,” she said. “I don’t think coffee drinking and quality coffee drinking is in any danger of going backwards.”

In light of the difficulties on the high street, the company is focusing on opening more coffee shops in drivethroughs and other travel locations, as well as rolling out more Express machines. Costa is serving more hot food, including chicken and chorizo rice boxes and egg muffins for breakfast, and has just launched a range of coffee with coconut milk.

Q&A

What are like-for-like sales?

Like-for-like sales have become the benchmark in the City for judging the current performance of retailers. Typically represented as percentage growth rates, like-for-like sales measure sales at stores that have been open for at least a year, stripping out the impact of sales at newer stores. The idea is that they allow a more transparent comparison of a retailer’s sales performance over a certain period of time, when compared with the same period of time a year earlier.

However, there is no formal industry standard. This means that some companies include new extensions to stores in their like-for-like sales, while others include sales generated by a customer paying with a voucher. Critics of the measure say that like-for-like sales do not always give an accurate picture of a retailer’s health. They argue that of greater relevance is profitability and how well a company is adapting to challenges such as the living wage and online shopping revolution.

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Excluding new stores, Costa’s overall UK sales dipped 0.1% in the quarter, marking only the second time they have ever fallen. The first decline was in the quarter to February last year, when they dropped by 0.8%.

Neil Wilson, senior market analyst at the financial spreadbetting firm ETX Capital, said: “The drop in Costa sales seems to be down to shoppers shunning the high street, resulting in lower footfall for stores, as well as pressure from the artisan coffee retailers who are gaining market share.

“At present it does not appear that higher-margin finer coffee products as well as the newly launched Cold Brew and Frostino lines are helping to improve sales and margins.”

Costa has 1,357 high street stores, 1,032 franchise stores and 7,100 Express machines in the UK.

The figures came after reports that the activist fund Sachem Head, which has built a 3.4% stake in Whitbread, was calling for the company to spin off Costa.

Costa uses 19m plastic straws a year and 26m stroons – straws with spoons on the end. They will be phased out this year and replaced with a non-plastic alternative.

Disposable cups are harder to tackle. Brittain said the company was working “very hard” with the rest of the industry and local processing plants on recycling all drinks containers that are thrown away on the high street.

Costa has ramped up its own recycling of disposable cups and is now recycling 12m a year, out of nearly 200m sold. Every Costa store now offers recycling. The chain is also offering a 25p discount to customers bringing in a reusable cup.

Whitbread’s budget hotel chain Premier Inn posted slower UK like-for-like sales growth of 0.5% after a tough October. It explained it had sold rooms cheaply in advance, rather than filling them later at a higher price.

Wilson said Premier Inn was probably under pressure from the rise of Airbnb and similar ventures, adding: “Given the weakness in sterling and increase in UK tourist spending, Premier Inn arguably should be doing better.”

Whitbread is rolling out Premier Inn in Germany, where it faces less competition in the branded hotel sector.

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